ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENTS:
FRANCINA A. DLOUHY STEVE CARTER
JAMES H. HAM III ATTORNEY GENERAL OF INDIANA
BAKER & DANIELS Indianapolis, IN
KAREN L. HSU
DEPUTY ATTORNEY GENERAL
CHARLES C. MEEKER
PARKER, POE, ADAMS & BERNSTEIN
BRIAN P. POPP
LASZLO & POPP
JOHN S. DULL
LAKE COUNTY ATTORNEY
Crown Point, IN
INDIANA TAX COURT
ISPAT INLAND, INC., )
STATE BOARD OF TAX COMMISSIONERS; )
PAUL KARRAS, in his official capacity as )
LAKE COUNTY ASSESSOR; BOARD OF )
COMMISSIONERS OF LAKE COUNTY ) Cause No. 49T10-0107-TA-74
INDIANA; FRANCES DUPEY, RUDOLPH )
CLAY, and GERALD SCHEUB, in their )
official capacities as members of the LAKE )
COUNTY BOARD OF COMMISSIONERS; )
and LAKE COUNTY, INDIANA, a political )
subdivision of the State of Indiana, )
ORDER ON MOTION FOR
PRELIMINARY INJUCTION AND MOTION TO DIMISS
November 7, 2001
Ispat Inland, Inc. (Ispat) filed an original tax appeal challenging a decision of
the State Board of Tax Commissioners (State Board) directing the Lake County Assessor
that he could lawfully disclose Ispats confidential information to Tax Management Associates,
Inc. (TMA), a North Carolina accounting firm hired by Lake County to conduct
an audit of Ispats personal property tax returns for the 2000 tax year.
Ispat moves this Court to enjoin the Assessor from disclosing confidential information
to TMA, arguing that the delegation of its duty to audit personal property
tax returns to TMA or any third party is unlawful.
Board moves this Court to dismiss Ispats case for lack of subject matter
The Court restates the relevant issues as follows:
Whether this Court has subject matter jurisdiction over Ispats appeal; and
Whether this Court should enjoin the Assessor from delegating its FACTS AND PROCEDURAL HISTORY
property auditing duties to a third party such as TMA.
For the reasons stated below, the Court DENIES the State Boards motion to
dismiss and GRANTS Ispats motion for injunction.
Ispat owns and operates an integrated steel mill in Lake County.
June 2000, Ispat filed its business personal property return, reporting for assessment its
tangible personal property located in its steel mill.
On November 15, 2000, the Lake County Board of Commissioners contracted with TMA
as a consultant to perform audits to verify the accuracy of business taxpayers
listings of personal property for ad valorem taxation. (Petr Injunction Ex. 3
at 5.) Specifically, under the contract, TMA was to conduct an audit
of Ispats business personal property tax returns.
In early February 2001, the Assessors office contacted Ispat and requested that Ispat
contact Tom Tucker, an employee of TMA. Ispats counsel called Tucker, who
stated that he had a copy of Ispats 2000 personal property return and
that he wanted to schedule an audit of Ispat. On February 12,
2001, Tucker sent a list of requested audit items to Ispats counsel, some
of which are considered confidential under Indiana Code
On February 22, 2001, Ispats counsel wrote to the Assessor, questioning TMAs authority
to conduct an audit. In his response to Ispat, the Assessor acknowledged
that auditors such as TMA were not referenced in the confidentiality statute, but
nonetheless, TMA would treat all Ispats information as confidential.
Around that same time, the Assessor also sought the State Boards position
on Lake Countys ability to contract with third parties and disclose confidential information
to them. Marilyn Meighen, a senior administrative law judge with the State
Board, responded by stating that local government officials could contract with third parties
to conduct their official duties and could therefore disclose confidential information to those
third parties in relation to the contracted job. On March 12, 2001,
the Assessor informed Ispat that it had until March 14, 2001, to schedule
an audit with TMA.
On March 14, 2001, Ispat filed a petition with the State Board
requesting that, under Indiana Code § 6-1.1-35-1
, it interpret the property tax laws
and instruct the Assessor that: (1) his office could not conduct an
audit of Ispats 2000 personal property return because the statute of limitations to
change the assessment had expired; (2) the confidentiality statute precluded his office from
disclosing Ispats confidential information to TMA or TMAs employees; and (3) he may
not delegate his official duties regarding business personal property taxes to a third
party such as TMA. Both Ispat and Lake County filed briefs and
reply briefs with the State Board.
On July 13, 2001, the State Board issued its Decision of the State
Board of Tax Commissioners, which was signed by the State Board Chairman and
its two Commissioners. (Petr Injunction Ex. 1 at 1, 11.)
The State Board concluded that the Assessor could hire a third party such
as TMA to assist with the personal property audits because the practical reality
[is] that local assessing officials lack sufficient expertise among their paid, full-time staff
to perform some auditing and similar tasks pertaining to personal property assessment.
(Petr Injunction Ex. 1 at 9-10.)
On July 30, 2001, Ispat filed this original tax appeal. Thereafter, Ispat
moved this Court to enjoin the Assessor from disclosing Ispats confidential information to
TMA and from delegating his personal property auditing authority to TMA. The
State Board moved to dismiss Ispats case for lack of subject matter jurisdiction.
The Court held a hearing on the both motions and took the
matters under advisement. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
The Court gives great deference to the State Boards final determinations when the
State Board acts within the scope of its authority. Wetzel Enters., Inc.
v. State Bd. of Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct.
1998). Accordingly, this Court reverses final determinations of the State Board only
when those decisions are unsupported by substantial evidence, are arbitrary or capricious, constitute
an abuse of discretion, or exceed statutory authority. Id. The taxpayer
bears the burden of demonstrating the invalidity of the State Boards final determination.
Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind.
Tax Ct. 1998).
I. Motion to Dismiss
The State Board argues that this Court does not have subject matter jurisdiction
over Ispats case because the State Boards Decision does not constitute a final
determination. (Respt State Boards Motion to Dismiss Br. at 3.) Specifically,
the State Board contends that the decision is not a final determination because:
(1) the phrase Final Determination is not present on the decision; (2)
the State Board issued the decision under its statutory authority to interpret tax
which is independent from the statutes that govern the procedures for the
State Board to issue a final determination;
and (3) the State Boards decision
was merely an advisory opinion sent in response to Ispats request. (Respt
State Boards Motion to Dismiss Br. at 3-5.)
Subject matter jurisdiction is the power of a court to hear and determine
the general class of cases to which the proceedings before it belong.
Musgrave v. State Bd. of Tax Commrs, 658 N.E.2d 135, 138 (Ind. Tax
Ct. 1995). A determination as to whether subject matter jurisdiction exists depends
on whether the type of claim advanced by the petitioner falls within the
general scope of authority conferred upon the court by constitution or statute.
Id. This Courts authority to hear and determine a case is set
forth in Indiana Code § 33-3-5-2, which states that the Tax Court has
exclusive jurisdiction over any case that arises under the tax laws of [Indiana]
and that is an initial appeal of a final determination made by the
State Board. Ind. Code § 33-3-5-2.
Ispats tax appeal meets both jurisdictional requirements. First, Ispats appeal arises under
Indiana tax law. A case arises under Indiana tax law if:
(1) an Indiana tax statute creates the right of action; or (2) the
case principally involves collection of a tax or defenses to that collection.
Lake County Council v. State Bd. of Tax Commrs, 706 N.E.2d 270, 274
(Ind. Tax Ct. 1999), revd on other grounds by 730 N.E.2d 680 (Ind.
2000). Ispat not only challenges the legality of the Assessors authority to
delegate his personal property auditing duties to a third party, but the Assessors
authority to disclose confidential information from personal property tax returns under Indiana Code
§ 6-1.1-35-9 and the statutory time limit for the Assessor to change a
personal property assessment, as well. As the parties do not dispute, this
case arises under Indiana tax law.
Second, Ispat appeals from a final determination of the State Board. A
final determination is an order that determine[s] the rights of, or impose[s] obligations
on, the parties as a consummation of the administrative process. Mills v.
State Bd. of Tax Commrs, 639 N.E.2d 698, 701 (Ind. Tax Ct. 1994);
see also Lake County Council, 706 N.E.2d at 275; Matonovich v. State
Bd. of Tax Commrs, 705 N.E.2d 1093, 1095 (Ind. Tax Ct. 1999), review
The State Boards reliance on Lake County Council to support its argument that
its Decision was not a Final Determination is without merit. In Lake
County Council, two taxpayers sent a letters to the State Board Chairman expressing
their concern about the Health Care for the Indigent (HCI) property tax levy
and requested a refund for any HCI overpayment. Lake County Council, 706
N.E.2d at 273. The State Board Chairman responded to the taxpayers, stating
the State Board had no power to change the HCI statutory formula and
no power to issue any HCI refunds. Id. The taxpayers appealed
to this Court claiming that the Chairmans letter constituted a final determination.
Id. at 274-75. This Court found that the Chairmans letter did not
constitute a final determination because the Chairman could not act alone in issuing
a State Board final determination. Id. at 275 (stating that Indiana Code
§ 6-1.1-30-1 requires a quorum of two members for the State Board to
conduct business). This Court also found that the Chairmans letter was not
a final determination because the letter did not determine the rights or impose
obligations on the parties ending the administrative process. Id.
Here, the State Boards Decision was signed by all three commissioners of the
State Board. (Petr Injunction Ex. 1 at 11.) In this decision,
the State Board determined that the Assessor had the right to disclose Ispats
confidential information to TMA because he had the right to delegate his personal
property auditing duties to TMA and because TMA could be construed an employee
under the confidentiality statute. (Petr Injunction Ex. 1 at 10-11.) Therefore,
Ispat was obligated to either allow the Assessor to disclose its confidential information
to TMA or directly turn over its confidential information to TMA. The
State Boards Decision determined rights and imposed obligations on the parties, and there
is no other administrative proceeding for Ispat to pursue regarding its challenge.
The State Boards Decision constitutes a State Board final determination for purposes of
Indiana Code § 33-3-5-2, thereby making judicial review of the State Boards decision
available to Ispat. Consequently, this Court has subject matter jurisdiction over Ispats
claims, and the State Boards motion to dismiss is DENIED.
Ispat seeks to enjoin the Assessor from unlawfully delegating his auditing authority to
TMA. Ispat has the burden of proving, by a preponderance of the
evidence, that it is entitled to the injunction. Union Township School Corp.
v. State ex rel. Joyce, 706 N.E.2d 183, 189 (Ind. Ct. App. 1998),
When exercising its discretion to grant or deny an injunction, this Court must
consider whether: (1) Ispats remedies at law are inadequate, thus causing irreparable
harm if the injunction is not granted; (2) Ispat has demonstrated that it
has succeeded on the merits of its claim;
(3) the threatened injury to
Ispat if an injunction is not granted outweighs the threatened harm the grant
of an injunction may inflict on the Assessor; and (4) the public interest
would be disserved by the grant of the injunction. See Ferrell v. Dunescape
Beach Club Condominiums Phase I, Inc., 751 N.E.2d 702, 712 (Ind. Ct. App.
2001); Union Township School Corp., 706 N.E.2d at 189.
However, if the acts that Ispat seeks to enjoin are unlawful, Ispat need
not make a showing of irreparable harm or a balance of the hardship
in its favor. See Ferrell, 751 N.E.2d at 713; Union Township School
Corp., 706 N.E.2d at 192. Therefore, this Court must first determine whether
the Assessors act of delegating his auditing duties to TMA was lawful.
Authority to Delegate
Ispat argues that the Assessor has no authority to delegate to TMA the
task of . . . verifying the accuracy of personal property tax returns.
(Petr Injunction Br. at 13.)
On the other hand,
the Assessor, relying on the State Boards final determination, argues that Indiana Code
§ 6-1.1-36-12 grants him authority to contract with TMA and delegate his authority
to audit personal property tax returns. (Respt Lake County Injunction Br. at
10.) The Court disagrees with State Board and the Assessor.
Indiana Code § 6-1.1-36-12 states [i]f a board of county commissioners enters into
a contract for the discovery of property which has been omitted from assessment,
the investigation and collection expenses shall be deducted from the gross amount of
taxes collected on the omitted property which is so discovered. Ind. Code
§ 6-1.1-36-12. In its final determination, the State Board concluded that Indiana
Code § 6-1.1-36-12 permitted counties to contract with third parties to find omitted
and undervalued property. (Petr Ex. 1 at 5.) The State Board
misread Indiana Code § 6-1.1-36-12.
The language of that statute does not refer to undervalued property. Ind.
Code § 6-1.1-36-12. Rather, the plain language of that statute refers to
the county contracting for the discovery of omitted property only. Id.
Moreover, it does not give the Assessor authority to contract with a third
party to investigate property, such as Ispats, that has already been reported for
There is no statutory provision that explicitly allows the Assessor to delegate his
auditing authority of personal property tax returns to a third party. While
the legislature has granted counties authority to employ third party professional appraisers or
technical advisors to assist in the general reassessment of real property,
has not granted counties any equivalent authority to employ third parties to assist
the county with auditing personal property tax returns. Therefore, the Court finds
that the well-established statutory construction maxim expressio unius est exclusio alterius, which means
that the enumeration of certain things in a statute implies the exclusion of
all others, is applicable here. Memorial Hosp. v. Szuba, 705 N.E.2d 519,
523 (Ind. Ct. App. 1999). Consequently, the legislatures specific references in other
portions of the Act to a countys authority to delegate its duties to
third parties in real property assessments, implies that the legislature intended to exclude
such authority to delegate in the personal property realm. Thus, the Court
finds that the legislature did not intend for a county to delegate its
auditing duties for personal property tax returns to a third party. See
Brandmaier v. Metropolitan Dev. Commn of Marion County, 714 N.E.2d 179, 181 (Ind.
Ct. App. 1999) (finding that where ordinance specifically lists use in one category
but not another, use will be assumed permitted only in category where mentioned),
trans. denied; Skrzypczak v. State Farm Mut. Ins. Co., 668 N.E.2d 291, 295
(Ind. Ct. App. 1996) (noting the rule of statutory construction that an Acts
statutes are read as a whole when attempting to ascertain legislative intent).
Finally, the State Boards attempt to justify its decision that the Assessor could
delegate its auditing authority to TMA because of the practical reality that the
Assessor and his staff lack the necessary expertise to perform an audit of
personal property tax returns is without merit. (Petr Injunction Ex. 1 at
9-10.) The State Board cannot rewrite statutes and give powers to the
Assessor that are not expressly provided. Matonovich, 705 N.E.2d at 1096 (noting
that [a]dministrative boards, agencies and officers have no common law or inherent powers,
but only such authority as is conferred upon them by statutory enactment).
Such powers to delegate personal property auditing duties can only be granted by
the legislature, not the exigencies of any particular situation. Id. at 1099.
Because the legislature has not granted county officials authority to delegate their auditing
or assessment duties to a third party, the Assessors delegation of his duty
of auditing Ispats personal property tax returns to TMA was unlawful. Accordingly,
to have an injunction granted against the Assessor, Ispat is only required to
show that it has demonstrated that it has succeeded on the merits and
that the public interest would not be disserved by the grant of the
injunction. See Ferrell, 751 N.E.2d at 713; Union Township School Corp., 706
N.E.2d at 192. By showing that the Assessor did not have the
authority to delegate his personal property auditing duties to TMA, Ispat has shown
success on the merits. Thus, this Court now turns to whether the
public interest would be disserved by the grant of the injunction.
Ispat argues that granting the injunction would be in the public interest because
public policy considerations do not favor the unauthorized delegation of governmental duties.
Ispat also contends that the injunction would assure taxpayers [that] their financial data
will be held confidential and will not be disclosed to unauthorized persons.
(Petr Injunction Br. at 20.) The Assessor argues, however, that the
public interest would be harmed by the granting of the injunction because it
would allow Ispat to avoid altogether an audit of its personal property return.
The Court does not find the Assessors argument persuasive. Although the Assessor
does not have the authority to delegate his auditing duties to a third
party, the Assessors office itself may conduct the audit of Ispats personal property
See footnote Indeed, Ispat has agreed to give its confidential information to
the Assessor and cooperate in the audit of its returns as long as
the Assessor or an authorized party conducts the audit. Therefore, the audit
of Ispats returns does not need to be delayed, and the public interest
would not be disserved.
In summary, Ispat has shown success on the merits and that the public
interest would not be disserved by the grant of an injunction. Therefore,
Ispat has met the prerequisite factors for a permanent injunction. Accordingly, this
Court GRANTS Ispats motion for injunction.
For the aforementioned reasons, the Court finds that it has subject matter jurisdiction
over Ispats case and finds that Ispat has met the prerequisites for the
issuance of a permanent injunction. It is, therefore, ADJUDGED, ORDERED, AND DECREED
that the State Boards motion to dismiss is DENIED and that the Assessor
and other Lake County Respondents are ENJOINED from delegating to TMA or any
other third party any personal property authority or duties of their respective offices
with respect to Ispat. This case will be set for hearing to
address the statute of limitations issue raised in Ispats original tax appeal petition.
The Courts reference to the Assessor also encompasses the
other Lake County respondents.
Footnote: The parties dispute which years are open to the audit.
Ispat claims that only the 2000 assessment year is at issue, while
Lake County argues that the years are 1998-2000. This issue is reserved
for another day.
Ispat also seeks to enjoin the Assessor from disclosing its
confidential information to TMA on the grounds that TMA is not an employee
to whom the Assessor can disclose such information under Indiana Code § 6-1.1-35-9.
Because this Courts finding that the legislature did not expressly authorize the
Assessor to delegate its personal property auditing duties to TMA is dispositive,
infra, the Court need not address the issue of whether TMA is an
employee under Indiana Code § 6-1.1-35-9.
Ispat purchased the steel mill from Inland Steel Company
in July 1998.
Footnote: TMA is headquartered in Charlotte, North Carolina. The
contract provided that TMA would be paid on an hourly basis.
Footnote: Lake County wanted TMA to audit Ispats personal property
return because it claims that [m]achinery and equipment of large manufacturers typically compromise
sixty percent (60%) to seventy-five percent (75%) of a businesss assets[;] however, Ispat
appears to have allocated less than forty percent (40%) of the purchase price
[of Inland Steel] to machinery and equipment. (Respt Lake County Br. at
Footnote: Indiana Code § 6-1.1-35-9 states that [a]ll information which is related
to earnings, income, profits, losses, or expenditures that is given to or acquired
by an assessing official or employee is confidential.
Ind. Code § 6-1.1-35-9.
See also Ind. Admin. Code 50 r. 4.2-15-11(a) (1996).
Among the prescribed duties of the State Board are:
(1) interpret the property tax laws of this state; [and] (2) instruct property
tax officials about their taxation and assessment duties and ensure that the county
assessors, township assessors, and assessing officials are in compliance with section 1.1 of
Ind. Code § 6-1.1-35-1.
The State Board also found that
TMA could be considered
an employee of the Assessor for the purposes of the confidentiality statute, thereby
allowing the Assessor to disclose Ispats confidential information to TMA. (Petr Injunction
See Ind. Code § 6-1.1-35-1(1).
Footnote: See Ind. Code §§ 6-1.1-15-3, -4, and -5.
Originally, Ispat sought a preliminary injunction to enjoin the Assessor
from disclosing confidential information to TMA and from unlawfully delegating his auditing authority
to TMA. During the injunctive hearing, however, the parties agreed that these
issues were being litigated fully before the Court and could therefore be determined
with finality. (Trial Tr. at 26, 42-43, 65.) Consequently, this Court
will treat Ispats motion as one for a permanent injunction. See Ferrell
v. Dunescape Beach Club Condominiums Phase I, Inc., 751 N.E.2d 702, 713 (Ind.
Ct. App. 2001) (noting a permanent injunction is appropriate to be issued upon
a final determination).
preliminary injunction case, however, the plaintiff would be required
to show at least a reasonable likelihood of success at trial by establishing
a prima facie case. Union Township School Corp. v. State ex rel.
Joyce, 706 N.E.2d 183, 189 (Ind. Ct. App. 1998), trans. denied; Ferrell, 751
N.E.2d at 713.
An analysis of whether the Assessors act was lawful also
encompasses the analysis of the second factor of injunctive relief: whether Ispat
demonstrated that it has succeeded on the merits.
Ispat does not dispute the fact that the Assessor can
conduct an audit of Ispats personal property returns but instead argues that the
legislature has not granted the Assessor authority to delegate that duty to a
See Ind. Code §§ 6-1.1-4-16, -17, -18.
While this Court is sympathetic to the Assessors plight, it does
not influence this Courts decision. There are other avenues by which to
complete the audit. For example, Indiana Code § 6-1.1-14-3 provides that the
State Board shall review the business personal property returns of taxpayers who report
a total assessed value of . . . $15,000 or more.